Title: Assessment of liquidity risk management in Islamic and conventional banks - an empirical study

Authors: Suleiman Jamal Mohammad; Asma Hussein Khalaf Al-Znaimat; Abdullah Ahemd Aldaas; Asem Tahtamouni

Addresses: Princess Sumaya University for Technology, Amman 11941, P.O. Box 1438, Al-Jubaiha, Jordan ' Princess Sumaya University for Technology, Amman 11941, P.O. Box 1438, Al-Jubaiha, Jordan ' Middle East University, P.O. Box 42, Amman, 11610, Jordan ' American University of Madaba, P.O. Box 2882, Amman, 11821, Jordan

Abstract: The aim of this study was to assess liquidity risk management (LRM) practices in Jordanian Islamic and conventional banks during the period (2013-2017). Data used were comprised from six banks, which consisted of three Islamic and three conventional banks in Jordan. Data from the banks financial annual reports covering from 2013-2017 were used to calculate the ratios used as a substitute for liquidity risk in conventional banking as well as Islamic banking in Jordan. The study found the relationship of the size of financial institution, return on asset, return on equity, and capital adequacy ratio with liquidity risk measurement is positive and important both in Islamic banks and conventional banks. Researchers found the practices of LRM are not optimal, yet were based on some considerations explained in this study. Further, progressive actions needs to be taken by the regulators and the banking players to improve the LRM practices.

Keywords: liquidity risk; risk management; Islamic banks; conventional banks; Jordan; financial ratios.

DOI: 10.1504/IJBEX.2020.108553

International Journal of Business Excellence, 2020 Vol.21 No.4, pp.549 - 563

Received: 12 Dec 2018
Accepted: 17 Feb 2019

Published online: 01 Jul 2020 *

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